By: Thomas S. Tripodianos Published: November 2006

Commercial General Liability

Question. Does a commercial general liability (CGL) insurer have a duty to defend a subcontractor as an additional insured under a sub-subcontractor's policy in an action brought by worker who alleged his injuries were caused by the sub- subcontractor's operations, even if it was uncertain whether any judgment would be within coverage?

answer. YES. The relevant facts may be briefly stated. General contractor (GC), hired HVAC subcontractor (SC) for a construction project. SC, in turn, subcontracted the HVAC-related steamfitting work for the project to sub-subcontractor (SSC). Laborer, while working on the project as an employee of another subcontractor, allegedly was injured when he slipped and fell on a patch of oil at the work site. Laborer commenced an action against GC. It appears from the evidence gathered through discovery in the personal injury action that a question of fact exists as to which contractor was the source of the patch of oil on which Laborer slipped. Specifically, the oil may have originated from any of the contractors who used oil to thread pipe at the work site. Of these contractors, only SSC was a subcontractor of SC. SC’s insurer’s carrier argues that additional insured coverage under SSC’s policy would not be triggered until the cause of Laborer's accident had been adjudicated. The insurance carrier also argued, in the alternative, that, even if its duty to defend SC under SSC's policy had been triggered, it could not be determined whether it was required to bear 100% of SC's defense costs as the primary insurer.

In the absence of unambiguous contractual language to the contrary, an additional insured (here the subcontractor) enjoys the same protection as the named insured (here the sub-subcontractor). An insurance company's duty to defend is broader than its duty to indemnify. The duty to defend is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest a reasonable possibility of coverage. If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false, or baseless the suit may be. The duty remains even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered. For that reason, when a policy represents that it will provide the insured with a defense, it actually constitutes litigation insurance in addition to liability coverage. An insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course. An insurer's duty to defend an additional insured is not contingent on there having been an adjudication of liability issues giving rise to a duty to indemnify the additional insured.

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